The Motley Fool

Fund management industry reaches record

Recent research released by Morningstar has found that assets under management within the Australian funds management industry reached a record high in the June quarter of $992 billion. The record was helped along by positive market movements and investor inflows of $12.6 billion over the quarter.

One interesting point noted in the research was just how wary investors remain of domestic equities, with Morningstar fund research analyst Darren Cunneen noting that “Australian and international equities were as different as day and night. The former lost over $12.5 billion while the latter gained around $17.8 billion.”

Investor bias for international over domestic equities was starkly observed by the growth in funds under management (FUM) at one of Australia’s fastest growing listed international fund managers. Over the 12 months to June 2013 Magellan Financial Group (ASX: MFG) saw FUM grow from $4 billion to $14.7 billion. This increase was helped along by a 39.7% return in its flagship fund, as well as $1.8 billion in retail fund net inflows and $6.2 billion in institutional fund net inflows.

In comparison Perpetual (ASX: PPT), which is primarily a domestic-focused equity manager, saw $700 million in net fund outflows from its Australian equities channel. Despite the outflow from equities and also from cash and fixed interest however, thanks to improving equity markets and solid returns, overall FUM within the Perpetual Investments division increased from $22.6 billion to $25.3 billion over the year, a rise of 12%.

Foolish takeaway

With an ever increasing pool of superannuation and what many perceive as a significant overexposure by superannuation (as a whole) to domestic equities, it is highly likely that allocations to global equities will increase in the future. Investors who are considering investing in the asset management industry may want to take a closer look at established global fund managers such as Magellan and Platinum Asset Management (ASX: PTM) to get exposure to this potential growth.

Earnings growth often leads to dividend growth which is just what income-seeking investors are after. Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


Motley Fool contributor Tim McArthur owns shares in Perpetual.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now